The majority of the cost is not in the hardware (memory is cheap) but in the software, customization, and maintenance of systems.
Just a week or so ago the Los Angeles Times ran an article about companies who bought into the idea of supply-chain software and ended up eating it. They were going to streamline their operations. The only problem was, the stuff didn't come in shrink-wrapped packages like the stuff from Egghead and install as easily as a CD copy of some computer game on one's personal computer. They forgot that the data in their particular industries required that the software be extensively "configured" and programmed (and the programming being unique, and highly layered, it tends to be bug-prone in ways that software used by hundreds of thousands of consumers isn't).
Supposedly half of the companies underestimated cost and deployment time by at least half. Some bought the software and virtually sat on it, bcause they couldn't get other deparments to buy into the changes it required; others couldn't get it customized correctly because they skimped on the necessary programming staff.
My point isn't to applaud the various dubious things that software is used for, just to point out that everyone has been talking as if it is all about hardware, which is "cheap" and "easily configurable" -- kind of like plugging in a toaster or refrigerator.
Peter Kosenko
---------- Original Message ---------------------------------- From: Jordan Hayes <jmhayes at j-o-r-d-a-n.com> Reply-To: lbo-talk at lists.panix.com Date: Mon, 9 Apr 2001 14:05:40 -0700 (PDT)
>> the whole idea of selling stuff on the web has taken a
>> rather serious blow, no?
>
>Only in some sectors; how about airline tickets? Check writing?
>
>The next wave of on-line business will be for cost-cutting rather than
>profit-centering ... just because you can't sell dog food (at a profit)
>on the web doesn't mean commerce on the Internet is dead, does it?
>
>Which, I think, is Brad's point. Having assembled the capital to
>have a farm -- facilities, power, AC, bandwidth -- is a bit more
>flexible than having, say, built a smelter.
>
>I like this idea that the first wave comes through and generates
>excitement (and investment dollars) to build infrastructure and then
>goes belly-up ... only to have the next wave come through and buy up the
>infrastructure cheap and turn it into something that makes money.
>
>Satellite phones anyone?
>
>/jordan
>